Released Data in the Spotlight

February 14, 2019

Thursday figured to be a day of data watching with the scheduled release of both Euroland and Japanese GDP figures, plus China’s trade balance. But it was much weaker-than-anticipated U.S. retail sales in December that caught the market’s attention, giving greater credence to recent warnings from several economists that U.S. recessionary risks seem to be rising. (see my essay of January 22nd on the next U.S. recession, for example).

U.S. retail sales slumped 1.2% in December, most in nine year, which slashed the 12-month rate of increase to 2.3% versus 3.7% on average last quarter. In other U.S. data reported today,

  • Producer prices edged down 0.1% in January as such had in December, resulting in a 2.0% on-year increase, but core PPI inflation remained in the mid-2 to 3% range.
  • The four-week average of new jobless insurance claims through February 9th, 231.75K, was up from 221K in the  previous 8-week period.

Real GDP in the euro area rose 0.2% last quarter. The pace during the second half of 2018 was only half that in the first half, and on-year economic growth declined from 2.7% in the final quarter of 2017 to 1.2%. Calendar year average growth fell from 2.4% in 2017 to 1.8% last year. Employment was 1.2% greater last quarter than a year earlier, but labor productivity was essentially flat.

Among Euroland’s largest members, GDP stagnated last quarter in Germany after contracting 0.2% in 2Q, and fourth quarter over fourth quarter GDP grew merely 0.6%, less than a quarter as much as the 4Q17-over-4Q16 expansion rate. French GDP went up 0.3% last quarter but just 0.9% on year. Italy is in recession, as attested by a 0.2% drop of GDP in 4Q following a 0.1% dip in 3Q and just a 0.1% uptick in 2Q. Spanish and Dutch growth remained resilient, expanding last quarter by 0.7% and 0.5%, respectively.

Japanese GDP had contracted 2.6% at a seasonally adjusted annualized rate last summer but rebounded 1.4% SAAR in the final quarter of 2018. Nonetheless, calendar year average growth retreated to 0.7% in 2018 after accelerating to 1.9% in 2017 from 0.6% in 2016. Japanese growth last quarter was paced by personal consumption and business investment. Public sector spending augmented GDP growth by a further 0.4 percentage points, but net foreign demand and inventory changes together depressed the quarter-on-quarter GDP growth rate by 2.0 percentage points. Real GDP was unchanged from its level in the final quarter of 2017, and the GDP price deflator posted an on-year dip of 0.3%. That was the third straight quarter to show a year-on-year decline in the GDP price deflator.

China’s trade surplus of $39.16 billion in January was larger than forecast and slightly more than twice the size of the January 2018 surplus. Exports grew 9.1% from a year earlier, much more than anticipated, but imports failed to contract as sharply as forecast.

President Trump is said to be favoring a 2-month extension of the deadline for U.S.-Chinese trade talks.

Indian wholesale price inflation slowed a percentage point to 2.76% in January in another indication of softer global inflationary pressure.

Likewise, Switzerland’s combined PPI/import price index dropped 0.7% on month and 0.5% on year in January. Not all of this deceleration was imported. Domestic producer prices fell 0.4% on month and 0.2% on year.

Irish CPI inflation held steady at 0.7% in January, and new home prices in Canada were unchanged in December both compared to November and year-earlier levels.

A 9.8% on-year plunge in Turkish industrial production recorded in December was the biggest decline since mid-2009, and output fell on a month-on-month basis in each of the last five months of 2018.

Brighter news was reported in Eastern Europe where real GDP recorded fourth quarter over fourth quarter growth in 2018 of 4.8% in Hungary, 4.6% in Poland, and 4.0% in Romania.

Overnight movement in the dollar shows gains of 0.5% versus sterling and and loonie, and 0.2% relative to the yuan but declines of 0.3%  versus the yen and 0.2% against the euro and Swiss franc.

Share prices are down in the U.S., Germany and Hong Kong.

Ten-year sovereign debt yields also fell in most places. So did gold and oil.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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